Dec 03, 2024 7:39 a.m.

Freightos: Weekly Ocean Freight Index Update

Looking forward, a potential rate rebound may take shape earlier than usual in preparation for the Lunar New Year holiday, which begins in late January 2025. Shippers are likely to increase orders in advance to accommodate longer transit times and align with anticipated seasonal volume increases.

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As of October 29, ocean freight rates continued to decline as global shipping experienced ongoing disruptions and softening demand due to the early peak season. The Freightos Baltic Index, dated October 29, reported the following week-on-week changes in booking rates:

Route

Cost (USD/FEU)

Changes

Updated on 29 October 2024

Asia - US West Coast

$5,540

       +5%

Asia - US East Coast

$5,165

-13%

Asia - Northern Europe

$3,489

- 1%

Asia - Mediterranean

$3,451

- 12%

 

Key takeaways: 

Following a three-day strike by port workers along the US East and Gulf coasts, congestion has largely dissipated, enabling trade flows to resume with minimal disruption. Despite concerns that the strike might elevate shipping rates on transpacific routes, rates instead softened throughout October. West Coast rates, in particular, saw a 19% drop, settling at $5,540/FEU by month’s end—a 32% decrease from their peak in July, in line with easing demand.

The Asia-Europe market experienced similarly substantial rate declines, with end-of-October ocean freight rates between Asia and Europe down 30% compared to the end of September. Rates are now approximately $3,500/FEU, a figure industry insiders believe marks the floor, as seen during the demand lull in March and April. Carriers are expected to implement blanked sailings in November to balance capacity against softening demand.

Looking forward, a potential rate rebound may take shape earlier than usual in preparation for the Lunar New Year holiday, which begins in late January 2025. Shippers are likely to increase orders in advance to accommodate longer transit times and align with anticipated seasonal volume increases.

In North American trade, industry participants are closely monitoring the US presidential election, with an eye on former President Donald Trump’s pledge to sharply increase tariffs if re-elected. Analysts suggest that the prospect of increased tariffs could push some shippers to boost inventories ahead of any potential policy changes, potentially affecting demand patterns and inventory strategies in early 2025.

 

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